A Culture of Debt

Another day older and deeper in debt.” In the old country song, that’s what you got after you loaded “16 tons of number nine coal.” That was back in the day when a hard-working man could still die singing, “I owe my soul to the company store.”

Today’s information-age proletarian may owe his or her soul to Wal-Mart or Citigroup, instead of the “company store,” but the effect is the same. Today the personal debt of the working class is, as it always has been, a favorite economic management tool of the owning class.

And debt has become a way of life for many middle-class American families. As far back as 2004, the average American household carried a credit card debt of $9,312. In 2007, the number of Americans filing for bankruptcy increased by 40 percent. The number of home foreclosures last year was 79 percent higher than in 2006. And every forecast says that those numbers will only get worse in the next couple of years.

How did this happen? Well, one small part of the answer is human nature. We see a shiny toy or a McMansion on the hill, and we want it. And there’s always some creature of serpentine descent ready to say, “Sign right here, and it’s yours.”

But that is only part of the story. We also have the levels of consumer debt that we do because they are beneficial to the overall U.S. economy. Just like the debt of those old-time mineworkers, ours serves to keep us on the job, productive, and, most of all, consuming.

The origin of our current culture of debt goes back to around 1973. That’s when America’s long run of unprecedented economic growth (which began shortly after World War II) hit a wall. OPEC raised oil prices, and European and Asian nations became industrial competitors. This was the beginning of the decline of the U.S. manufacturing economy and the end of wage growth for the American worker. Thirty-five years later, the U.S. median wage per worker still hovers around the 1973 level. For male workers, most affected by deindustrialization, wages have actually de­clined slightly since 1973.

This was an unprecedented problem. Since the opening of the Western frontier, America’s social peace has depended upon its expansion. Pro­gress was our national faith. How could that be maintained in the face of slowed growth and declining wages?

And, to make matters worse, our “new economy” (without manufacturing) was almost completely dependent on consumer spending for the growth it did provide. If households didn’t have disposable income to spend, America’s economic treadmill would grind to a halt.

The first answer to this conundrum was to maintain household income growth by putting more members of each household into the workforce (no more at-home mothers). This came with a general trend toward longer working hours and shorter vacations. Next came an easing of access to credit, so that people could keep spending after their income was gone.

The current foreclosure and bankruptcy statistics are clear indicators that the debt fix has stopped working. Of course, as long as China and various Persian Gulf nations keep buying U.S. Treasury bonds, our government can keep fueling the treadmill with bailouts and tax cuts. But a day of reckoning is clearly drawing nigh.

Part of any solution to America’s culture of debt, of course, will be personal. Many middle-class Americans need to accept limits and learn the meaning of “no.” But such a cultural change would only weaken the economic structures that require consumer debt. Ultimately, if the American economy is to make sense and do justice for a majority of our people, we have to end the “free trade” detour of the past two decades and get back to manufacturing.

That doesn’t have to mean smoky steel mills and burning rivers. But it should mean windmills, solar panels, noncarbon vehicles, and the infrastructure needed to support them. That kind of high-value manufacturing, coupled with a little bit of realism about personal spending, would create jobs that could support a family, without overtime, double incomes, or crushing debt.

Danny Duncan Collum, a Sojourners contributing writer, teaches writing at Kentucky State University in Frankfort, Kentucky.

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